Bitcoins were launched in 2009. Though the concept is not new but many people don’t understand what bitcoins are and how bitcoins work. Bitcoins are defined as a type of virtual currency, introduced to life through the Internet.
What are bitcoins?
Bitcoin is a form of digital currency, created and held electronically. No one controls it. Bitcoins aren’t printed, like dollars or euros – they’re produced by people, and increasingly businesses, running computers all around the world, using software that solves mathematical problems.
There comes two terms bitcoins and Bitcoins, they both look similar bit comes with slight difference that is the capitalization of first letter. Bitcoin refers to the software or network while bitcoin refers to the digital currency.
Bitcoin is the first and easily the most popular cryptocurrency, or currency that uses to control its creation, administration and security.
What makes it different from normal currencies?
•bitcoin’s most important characteristic is that it is decentralized. No single institution controls the bitcoin network.
•Bitcoin uses P2P technology without a central authority.
•Bitcoin is primarily digital.
•Bitcoin has a maximum 21 million limit.
•Bitcoin has limited acceptance.
•A Bitcoin transaction can take 10 minutes to confirm.
•Bitcoin balances are not insured.
Who developed the idea of bitcoins?
The idea of bitcoin was given by Satoshi Nakamoto in May 2008. Bitcoin is peer-to- peer currency and runs on a system that allows you to send and receive bitcoins without the need of a third-party.
How bitcoin works?
•The first thing you need to do as a new user is install a digital wallet on your computer or mobile device.
•This wallet is simply a free, open-source software program that will generate your first and subsequent Bitcoin addresses.
•There are three types of wallets – a software wallet (installed on your computer), a mobile wallet (which resides on your mobile device) or a Web wallet (located on the website of a service provider that hosts bitcoins).
•Bitcoin uses public key encryption techniques for security. This means that when a new Bitcoin address is
created, a cryptographic key pair consisting of a public key and private key – which are essentially unique, long strings of letters and numbers – is generated.
•Each address has its own Bitcoins balance, so all you need to do is acquire several Bitcoins that will be held at one of the addresses in your wallet. You can acquire Bitcoins through a number of ways – by buying them from a Bitcoin currency exchange such as Mt. Gox or Bitstamp, or through a service like BitInstant that enables fund transfers between Bitcoin exchanges and supports various payment mechanisms.
•All Bitcoin transactions are stored publicly and permanently on the Bitcoin network, which means that the balance and transactions of any Bitcoin address are visible to anyone. Experts therefore recommend that Bitcoin owners create a new address for each transaction as a means of ensuring privacy and enhancing security.
•Once you have created a Bitcoin address and have acquired Bitcoins, you can use them for an online transaction with a company that accepts Bitcoins as a payment mode. The company will send you the Bitcoin address to which you can send your Bitcoin payment. You direct the payment to that address; while the transaction takes place within seconds, verification can take 10 minutes or longer.
•All Bitcoin transactions, without exception, are included in a shared public transaction log known as a “block chain”. This is to confirm that the party spending the Bitcoins really owns them, and to prevent fraud and double-spending.
Conclusion: Bitcoin evolution over the next few years will determine whether this leading cryptocurrency will become an integral part of the global financial system, or whether it is destined to remain a niche player. Bitcoin has made significant progress in its adoption and usage since it was unveiled in 2009.
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